A few years ago, I published here a broadly sceptical view of cryptocurrency – specifically, whether any of these tokens could plausibly serve as money. By that, I didn’t mean whether it would limp on as a niche medium of exchange among a small circle of enthusiasts, but would become the generally accepted medium of exchange you could use in a supermarket in an advanced economy. Whether cryptocurrency could fulfil some other useful role – or, indeed, could make some people very rich – was left open.

In the time since, I’ve found little reason to revise that view, in spite of – or perhaps because of – the fact that Bitcoin’s market price has more than doubled. If anything, 2025’s acceleration in the gold price, while Bitcoin ended on a loss, gives us the clearest indication yet that the latter is not regarded as a safe haven or store of value. Rather, it behaves far more like a risk asset – closer to a leveraged tech stock than to money.

I should admit that, insofar as cryptocurrency offers even the possibility of an escape from state-controlled money, I would rather be an enthusiast than a sceptic. Anything that provides the faintest glimmer of light at the end of the tunnel of fiat absurdity deserves some goodwill. And yet, however I approach it, I still can’t find any reason to regard it as anything more than a speculative punt – and one that, in any case, seems to be gradually getting co-opted, rather than repelled, by governments and mainstream institutions. So much for the revolution.

This short article will address a few persistent confusions I often see bandied about in the crypto world, and which help to illuminate some of the points made in my earlier piece. For brevity, I’ll refer mainly to Bitcoin, although almost everything that follows applies in principle to any cryptocurrency.

Scarcity

First, one of the supposed benefits of Bitcoin is its scarcity. No more than 21 million Bitcoin can ever be “mined” – a technical process referring to each token’s digital creation. This stands in contrast not only to fiat money but also to gold, the above-ground supply of which grows by roughly 1–2% a year.

Crypto enthusiasts, however, seem not to grasp what “scarce” means in an economic sense. A good is scarce not if its total quantity is finite, but if, at a price of zero, demand exceeds supply. Scarcity therefore depends as much on the strength of demand as on the limits of supply. Any cryptocurrency could become non-scarce overnight if no one wanted it. To argue that Bitcoin will be demanded because it is scarce effectively reduces to: “Bitcoin will be in demand because it is in demand.”

What crypto supporters really mean by “scarcity” is that Bitcoin has a relatively small and stable stock – a feature shared by most commodities that historically serve as money. To that extent, this misuse of the word is more a terminological slip than a deep conceptual error.

But the problem, then, is this: how wide is the net of what counts as “small and stable”? Gold’s physical traits – inertness, malleability, high density, divisibility, non-corrosiveness, recognisability – are not replicated perfectly by any other element. Its chemical uniqueness gives it a natural monopoly in its category, which is why it has served as money across cultures for millennia. Bitcoin, by contrast, has no such natural monopoly. Its architecture is conceptually abundant. Its defining features – transferability, transparency, and the rest – can, in principle, be cloned indefinitely by any number of tokens claiming to be just as good, or better. A limited supply of one token does not confer scarcity in the category.

In short, a single crypto token may have a capped supply, but cryptocurrency (and “digital assets”) as a whole does not.

Store of Value

This brings us to the question of which asset should be regarded as the safer store of value. Roughly 45% of gold is used in jewellery and electronics, giving it a steady industrial and ornamental demand that forms a non-monetary base. So even if every investor dumped gold tomorrow, there would still be a floor below which its price in terms of other goods is unlikely to fall. It is always wanted for something, regardless of price or politics – and because it is genuinely unique, we can be reasonably confident that this will remain the case.

Bitcoin’s utility isn’t consumption or ornamentation but a service – record-keeping or protection from de-banking – that future technology can easily replicate or improve. And its usefulness depends entirely on a specific technical environment: a functioning internet, electricity, current encryption assumptions, and a shared social consensus around “blockchain.” If any of those pillars weaken, so does its utility. That is a fragile foundation for enduring demand.

It may well be that Bitcoin’s utility is never surpassed, but that is beside the point. The mere risk that it could be is disadvantage enough.

But, to return to the original point, even if Bitcoin is genuinely limited in supply, numbers alone don’t make its long-term value a fait accompli. Pointing out – as a recent Instagram post did – that there are 56 million millionaires in the world versus 21 million Bitcoin doesn’t mean those millionaires will rotate their assets into cryptocurrency and drive its dollar price to infinity any more than they might do so into Pokémon cards.

Decentralisation

In my previous essay, I spent some time examining Bitcoin’s decentralised architecture as a means to eliminating counterparty risk. What I didn’t examine was whether decentralisation is a benefit in principle.

This is a point upon which some libertarians stumble when discussing hierarchy and organisational structure. In libertarian or classical-liberal thought, decentralisation means dispersing state decision-making to the smallest possible jurisdiction. For the libertarian, it is a way-station toward the logical end: the full sovereignty of each individual. For the classical liberal, it is a political safeguard against the concentration and abuse of power. Either way, decentralisation is not an intrinsic good – and the logic does not automatically apply to private organisations that people may freely join or leave.

Crypto culture, however, seems to universalise the principle, treating the dispersal of state power as a general design rule – as though any centralisation, even within a voluntary enterprise, is inherently suspect. This is false. In markets, coordination and hierarchy often increase efficiency. A business, exchange, or clearing house may centralise functions precisely to lower transaction costs. And, ironically, the Bitcoin ecosystem itself has drifted back toward centralisation around exchanges, custodians, and key developers – because coordination is economically useful. “Spontaneous order,” in practice, still produces centres of gravity.

So while decentralisation protects liberty in politics, in business it is simply one design choice – usually a trade-off between concentrated authority and efficiency. Total decentralisation can produce paralysis, duplication, or even new concentrations of hidden power. There’s a reason most organisations end up with a handful of key decision-makers rather than rule by committee. The deeper libertarian insight, then, is that liberty requires decentralised power – not decentralised everything.

I suspect also, however, that Bitcoin’s decentralised architecture leaves a gap in the human psyche – a craving for a focal point, for somewhere the buck ultimately stops. The fact that no one can control what is, after all, a human creation may be seen not as an advantage, but as something nebulous and unsettling: an uncharted experiment with no final authority and no clear point of accountability if things go wrong. Yes, a counterparty such as a bank might lose your money – or your gold – but at least you know who to blame, and there are long-established legal procedures for redress.

To avoid misunderstanding, I am not suggesting it is wrong for the Bitcoin architecture to be decentralised – far from it; merely the notion that it is a benefit is not as self evident as some of its proponents believe.

Acceptance

Finally, on the question of whether Bitcoin could ever serve as money, the fact that the question even has to be asked suggests it probably won’t – at least not when people have a free choice. A commodity doesn’t become money through argument but through spontaneous social convergence. When we describe the properties that make gold suitable as money, we’re rationalising behaviour that has already happened. Its legitimacy is retrospective, not theoretical. Gold, silver, salt, cattle – none of these were “adopted” after a white paper listed their properties. People valued them first for beauty, fungibility, or usefulness, and only later did those traits explain why they worked as money. The explanation follows the adoption, not the other way around.

Bitcoin reverses this sequence. Its advocates try to bootstrap belief – insisting it should be money because of its divisibility, scarcity, portability, and so on. But that isn’t how monetary media emerge. Money is a social fact before it is an economic theory. You can’t persuade a society into consensus money; you can only observe what people have already chosen. And right now, Bitcoin still needs explaining – which means it hasn’t crossed the threshold into intuitive, instinctive acceptance.

When something truly is money, no explanation is needed. People simply know – and only later do economists work out why.

Related posts:

A Reply to Hugo Miller: Bitcoin vs Gold as a Monetary Standard Digital Toilet Paper Gold, Paper, and Collapse: The Rise and Fall of Britain’s Gold Standard Paul Craig Roberts and the Gospel of Inflation: A Critique Fiat-currency-backed STABLECOINS are an inflationary time bomb  Honest Money, Honest Men Tariffs, Trade and Trump – an Austro-Libertarian Response The Bank of England Prepares to Wreck the Economy (Again) Guardians of Globalism: The Shadowy Power of Central Banks in Advancing the Globalist Agenda The Illusion of War, the Reality of Debt: America’s Fiscal Collapse and the Implications for Britain Rome Was a Market Economy: Anyone Who Says Otherwise is a Fool The Manufactured Collapse: How Inflation Is Being Used to Enslave America

Powered by YARPP.